Cape Town, July 1: South Africans faced a bewildering array of investment opportunities on Tuesday when, for the first time in decades, individual investors were given the opportunity to play the global market.

In the latest step of a phased dismantling of apartheid-era exchange controls, private investors can invest up to 200,000 rand abroad or in foreign currency-denominated local bank accounts.

Exchange controls on foreign investors have already been dismantled and institutions have been allowed in stages to place up to 10 per cent of their assets abroad.

Now individuals are being given their turn to go global."This means that for the first time that individuals can physically move some of their money offshore and keep it there," said Sanlam Asset Management economist Jac Laubscher.

Weekend newspapers were awash with advertisements chasing the three to five billion rand South African citizens and residents are expected to send out of the country.

Most marketing campaigns promote the foreign equivalents of the mutual funds or unit trusts that are the staple of middle-income South Africans seeking to beat the country's existing real interest rates of around six per cent.The relaxation announced by finance minister Trevor Manuel in his March 12 budget and implemented on Tuesday allows anyone aged 18 or over and in good standing with the tax authorities to invest or spend up to the 200,000 rand limit abroad.

The allowance is a one-off in addition to the 80,000 rand annual travel allowance that is every South African's right, but Manuel has said further concessions could follow.

Investment company executives said diversification would be the main motivation for a shift into the relatively unknown terrain of international stocks and bonds.

"We recommend diversification with 25 to 30 per cent of your portfolio invested outside the South African economy," said Di Turpin, marketing manager for Old Mutual, the country's biggest investment company.

Laubscher was more conservative, recommending that 10 to 15 per cent of an individual portfolio should be invested abroad.

With First World interest rates averaging less than a quarter of the maximum 16 per cent available on cash savings in South Africa and service charges at least 50 per cent higher, it would take a major rand devaluation to beat a cash investment at home, Laubscher said.

Though the rand fell 29 per cent against the dollar in 1996, most economists predict the currency will track inflation differentials over the next 12 months.

Inflation is widely expected to remain below 10 per cent in the foreseeable future so betting against the rand is unlikely to beat the return on a domestic investment.

Southern International chief executive Carel de Ridder said he expected South Africans to shift considerable capital from domestic unit trusts to foreign mutual funds.

"I have no doubt in my mind that a lot of people are going to take advantage of this and move funds abroad, but this is really not a good time for it," he said.

"People are going to move large amounts of capital out of an economy where interest rates are about to start coming down to markets where interest rates are about to start going up."

Turpin said her company, the country's biggest investment institution, launched three offshore equity funds and two money market funds on Tuesday."I think the range of products on offer by the industry as a whole is adequate at the moment, but in time there will be a demand for more sophisticated instruments," she said.

"Right now, I suspect there is more enthusiasm for this change in the financial services industry than there is amongst the private investors."

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.